A Limitation of Using the Scattergraph Method to Estimate the Cost

question 146

Multiple Choice

A limitation of using the scattergraph method to estimate the cost components of total cost is:

• A)The scattergraph method is complex and costly to use.
• B)The scattergraph method requires the use of statistical software.
• C)The scattergraph method is not an accepted method for many companies.
• D)The choice of the line used to estimate the cost components is subjective.

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Definitions:

Non-Current Liability

A financial obligation of a company that is due for repayment in more than one year's time.

Current Portion

The part of a long-term liability that is due to be paid within the next twelve months.

Classified Statement

A financial statement in which similar items are grouped together to facilitate better understanding and analysis of the company's financial position and performance.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or within the operating cycle of a business, whichever is longer.